Statement on the regulatory treatment of retail residential mortgage loans under the Help to Buy

The purpose of this statement is to describe the Pillar 1 capital requirements for loans protected under the Help to Buy: mortgage guarantee scheme (HBG) as set out in the relevant European legislation.
Published on 08 October 2013

The regulatory treatment described here would be applicable to mortgage insurance schemes with similar contractual features. 

This statement does not provide an exhaustive description of the prudential requirements for HBG loans, so firms are encouraged to review the EU legislation and, as necessary, seek independent advice to confirm that they meet all applicable requirements. In particular the Capital Requirements Regulation requires firms to obtain a legal opinion on the effectiveness and enforceability of credit protection afforded a guarantee such as HBG. The PRA considers this requirement to be capable of being satisfied on the basis of a legal opinion obtained jointly by firms. Under HBG the Government guarantees a portion of the first losses, net of recoveries, on retail residential mortgage loans eligible for the scheme.

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